China buys more U.S. coal, sends North Korea packing

China is banning shipments of coal from North Korea because of last week's missile test. (AP Photo/Andy Wong)

China is banning shipments of coal from North Korea because of last week's missile test and has made up the shortfall by importing more coal from the United States.

The news comes just days after President Trump met with Chinese President Xi Jinping at his Mar-a-Lago resort in Florida, where the administration said North Korea's missile tests would be a top priority in the talks.

Reuters first reported Tuesday that China's customs department ordered all companies that receive imports from North Korea to immediately return all coal cargoes, according to three trading sources who saw the order. The order was sent by the Chinese government on April 7, soon after Trump and Xi concluded their discussions.

The decision will be a boon for U.S. coal producers as China has ramped up orders of U.S. coking coal used in making steel, Reuters reported. The increase in U.S. coal imports fits nicely with Trump's pro-fossil fuel agenda to put miners in coal country back to work.

"Trump said he'd be good for coal, and I don't think he meant N. Korean coal," Luke Popovich, spokesman for the National Mining Association, said in an email to the Washington Examiner.

Helping the situation for U.S. producers is that Tropical Cyclone Debbie knocked out coal terminals in Australia last month. Australia is a top producer and exporter of coking coal for steel-making in Asia. That type of coal surged in price due to the supply shortage in China but began to return to normal Tuesday.

Coal consumption in the U.S. is expected to continue growing going into the summer, the government's Energy Information Administration said Tuesday in its latest monthly short-term outlook.

"U.S. coal production is expected to rise this year due in part to expected higher coal-fired electricity generation," said acting EIA Administrator Howard Gruenspecht. At the same time, "the amount of electricity generated from natural gas this summer is forecast to be lower than last summer, reflecting higher natural gas prices," he said. The summer is also expected to be cooler than last summer, the EIA said.

Natural gas has displaced coal as the top fuel for power generation in much of the U.S., but in recent weeks coal is beating out gas in some regions such as the East Coast.